Is Down 55% from Its IPO, But It’s Not Alone — Demand Media

Majority of 2011 U.S. IPOs are under water.

If you managed to buy Demand Media’s stock at the $17 offering price in January, you’ve taken a 55% hit. The stock closed today at $7.62.

More likely if you bought on the first day you paid north of $20 for the stock.

But is this fall since the firm is weak or is it just a case of bad timing? (or good for those that got to sell there shares in January?)

Data tracker Dealogic states 63% of U.S. initial public offerings this year are underwater. Of course the entire market is below where it started this year, so that shouldn’t come as a huge surprise. And we were all taught in school that IPOs underperform the market in the long term.

Nonetheless, investors are now paying more attention to earnings of recently IPO’d firms. In the case of Demand Media, its earnings are negative.